Steps to consider to start and grow a company. Basics are provided to help entrepreneurs. Examples may relate to Biotech, Pharma and Medical Device businesses, but the ideas apply to most technology fields.

Wednesday, October 17, 2012

5 Actions may enhance customer diversity or allow you to recover from a loss

What plans do you have before they are GONE?

San Francisco is a great place to visit and walk around.I often like to walk down to Fisherman’s Warf
to look around.Pier 39 has numerous
shops of different types and is a little like an outdoor mall.Just outside of the shops are a number of
platforms where tourists would stand and watch the sea lions.The sea lions were there for many years but
the numbers tended to fluctuate as the animals migrated.One Thanksgiving week yielded reports of as
many as 1,700 sea lions present on the outdoor landings.Tourists usually stand and watch the sea lions
but they mostly annoy the local boating community.

A few years ago my visit to the area resulted in a surprise.No sea lions were present! Google searches
yielded articles suggesting they left for places unknown.There were no reports of harm, but
suggestions that they may have chased a source of food down the coast.In any event, after many years that area was
void of sea lions.

This is just another illustration of how unexpected events can
cause changes that affect what seem to be the most stable situations.A recent article, “Your best customers sometimes kill your
company“, described the hazard of having one of your major customer
leave.Such events can take place for
reasons other than actions on your part.The loss is not a trivial issue to manage or predict.It is much more devastating than having sea
lions migrate away from a tourist location.You cannot control the sea lions any more than you can control your
largest customer, but you can be proactive in seeking ways to lessen the loss.It will hurt no matter what you do but maybe
you can keep your company from going under.There is no activity assured to save you.The stress and work required to survive will
be exceptional.In the end, your company
may fail. That said the following are a
few considerations that may be useful for lessening the damage and providing a
window to adjust and survive.

Plan – Consider the
alternativesof customers that your
business may appeal to.Create a chart
and determine the most diversity you can obtain as well as what type of revenue
achievable.Develop a strategy to sell
to these and add to the mix of your customers long before you lose the big
one.Try to keep your mix such that you
can survive the loss of one big customer.

Diversify -Having a big customer is a great thing.It will take significant resources to keep
them happy and you should do that.One
way to diversify is to assign or hire a business development or sales person to
seek other clients in different sectors.Make every effort to create a range of customers, hopefully in different
sectors.Keep in mind that the loss of your
big customer should leave you with residual revenues sufficient to survive.

Save -Take a portion of your revenues and save them
for a rainy day.You can always use the
funds for other things, but if you lose a customer, the funds may keep you
afloat until you can find other sources of revenue.

Downsize – Have a
plan to reduce the expenses of the company.Also, determine the trigger point where you must implement the
plan.It is too late to try to save the
company after all your funds are gone; act before it is too late.Determine the residual window post downsizing
and the events you must execute to keep the company alive.

Seek
alternatives – If you have a cushion, one option may be to seek a merger or
acquisition immediately.The downsized
company with residual sales may be a perfect fit with a different
business.Knowing these businesses in
advance will cut the time it takes to engage in discussion.The combined businesses may be able to grow
sufficiently to make everyone whole again.